Buying a smartphone on EMI is nothing new – with flagship smartphones becoming more and more expensive by every passing year, OEMs and retailers alike, along with banks, have on offer a wide assortment of EMI options that allow you to avail phones that may otherwise be a bit of a stretch. However, while metro and tier 1 markets in India have customers with certified credit scores, allowing for a streamlined, credit card-based payback process – the rest of India does not enjoy the same benefits. A recent report on Rest of World has now highlighted this plight – buying a smartphone on EMI for lesser values, and apps that are used to track users and lock their phones in non-payment cases.
Lack of credit history
The report highlights a startup named Datacultr, which has tapped into this very ecosystem by realising that even those without immediately available capital still wants to buy phones. Those needing or wanting to avail a smartphone on EMI in India do not always have credit history or credit ratings, which are typically used to assess a buyer’s creditworthiness – and therefore reflect whether a loan can be sanctioned for a person. These procedures are used to figure out whether a person may be a flight risk when it comes to paying back for the phones they bought – which is where the role of Datacultr’s app comes in to play.
In essence, when a person without a credit history buys a smartphone on EMI, an app is compulsorily installed on the recently purchased device, without any way for users to uninstall it. This app takes access to all of a user’s data – their text messages, photos and location, which it then holds as a collateral to the loan given to them.
Tactics of payback
The Rest of World report claims that Datacultr takes about three to four months to assess the risk that a customer represents, and subsequently starts using a wide variety of ways to force a user to pay back in case they miss a payment schedule. These ways include audio-visual notifications in local languages to begin with – and then escalates to force-changing wallpapers, push notifications every time features such as cameras are used, blocking on popular social media apps, and subsequently, locking out a smartphone until the payments are cleared.
While lenders would claim that this amounts to a fair recollection policy, such formats of forcing a payback have come under increasing scrutiny. Google India, for instance, in January cracked down on hundreds of instant loan apps and services after complaints of personal harassment based on loan repayments surfaced. These unregulated instant loan services typically work in high interests, and gamble on offering loans without holding collateral. That gamble includes aggressive tactics to force a user to pay back. In this case of a loan app tracking a smartphone on EMI to make sure that a user pays their due back, such tactics may not be entirely undue.
Datacultr’s loan tracking app is reportedly installed across over 1,800 phones in the Indian subcontinent and Ivory Coast, where smartphone sales hold strong. This, essentially, represents a two-way problem where buying a smartphone on EMI has become easy, but also risks considerable harassment in case EMI payment dates are missed for any reason. Given that these loans are also not safeguarded by regulatory policies, it is a gamble that users are taking, and they should be aware of the risks that they may subsequently fall into – including having their phone bricked by a lender should they fail to pay back.